v3.25.2
Income Taxes
 12 Months Ended
Sep. 30, 2024
Income Taxes [Abstract]  
INCOME TAXES

7. INCOME TAXES

 

The Company files consolidated income tax returns with Citius Pharma. The Company recorded deferred income tax expense of $576,000 for each of the years ended September 30, 2024 and 2023 related to the amortization for taxable purposes of its in-process research and development asset.

 

The income tax expense differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended September 30, 2023 and 2022 due to the following:

 

   2024   2023 
Computed “expected” tax benefit   (21)%   (21)%
Increase (decrease) in income taxes resulting from:          
State taxes, net of federal benefit   (7.1)   (7.1)
Permanent differences   6.1    2.6 
Increase in the valuation reserve   24.8    30.3 
    2.8%   4.8%

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

   September 30,
2024		   September 30,
2023		 
Deferred tax assets:        
Net operating loss carryforward  $7,530,000   $4,646,000 
Capitalized research and development expense   2,080,000    1,073,000 
Stock-based compensation   1,091,000    239,000 
Research tax credit   1,035,000    850,000 
Valuation allowance on deferred tax assets   (11,736,000)   (6,808,000)
Total deferred tax assets          
Deferred tax liabilities:          
In-process research and development   (1,728,000)   (1,152,000)
Total deferred tax liability   (1,728,000)   (1,152,000)
Net deferred tax liability  $(1,728,000)  $(1,152,000)

The Company has recorded a valuation allowance against deferred tax assets as the utilization of the net operating loss carryforward and other deferred tax assets is uncertain. During the years ended September 30, 2024 and 2023, the valuation allowance increased by $4,928,000 and $4,043,000, respectively. The increase in the valuation allowance during the years ended September 30, 2024 and 2023 was primarily due to the Company’s net operating losses and capitalized research and development expenses. At September 30, 2024, the Company has a federal net operating loss carryforward of approximately $28,700,000. Federal net operating loss carryforwards generated in tax years beginning after 2017 may be carried forward indefinitely.

 

As of September 30, 2024, the Company also has estimated federal research and development credits of $1,035,000 to offset future income taxes. The tax credit carryforwards will begin to expire in 2042.

 

The Company accounts for uncertain tax positions in accordance with the guidance provided in ASC 740, “Accounting for Income Taxes.” This guidance describes a recognition threshold and measurement attribute for the financial statement disclosure of tax positions taken or expected to be taken in a tax return and requires recognition of tax benefits that satisfy a more-likely-than-not threshold. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. There have been no reserves for uncertain tax positions recorded by the Company to date.